Insurance Industry Reacts To Gulf Coast Oil Spill

The blame game for the recent British Petroleum oil rig accident is just getting started and it will likely continue. The insurance implications of this disastrous event are also just commencing. It will take several years to sort out the various liabilities and what resources, in terms of insurance assets, and other assets, each player will have to contribute, according to a leading expert in environmental insurance coverage. There is one thing for certain, and that is, all of this will be quite complicated, involving a large number of insurance companies.

A number of insurance coverages, such as basic liability, workers compensation, excess casualty and liability, environmental and contingent business interruption have been triggered by the tragic event in the Gulf. All liability coverages will be involved for BP, Transocean, Cameron International Corp. and Halliburton Co. Each of these companies will have extensive liability problems. Folks in the seafood industry, coastal property owners, and other businesses along the Gulf Coast, as well as families of the 11 rig workers who were killed in the explosion, will be Claimants.

While BP is self-insured, its total amount of self-insured retention is unknown at this point. Reinsurers will still be responsible for a substantial amount. Every major reinsurer in the world will likely be involved in this disaster, including Swiss Re, Munich Re, Gen Re, and Partner Re. More will be written on the insurance implications over the coming months.

It has gone largely unnoticed, but Transocean Ltd. has already received $401 million in insurance payments for its oil rig that exploded and sank. You will recall that this company owned the rig and rented it to BP. Transocean expects to be paid promptly for its loss, but it’s very clear the company doesn’t feel that way when it comes to its victims.